Fears raised over cloud privacy restrictions

New proposed laws that restrict the shift of data overseas could reduce the benefits of moving to the cloud, an expert has warned, despite research showing local firms view IT cloud applications as a key cost-saving measure.

The prediction comes as Attorney-General Nicola Roxon prepares to introduce amendments to the Privacy Act 1988 in Parliament.

While the final proposals have not been made public, Roxon recently said that the amendments would involve “tightening the rules on sending personal information outside Australia”.

According to Matt Oostveen, research director at market intelligence firm IDC, the impact of tighter regulations on where data is kept could reduce the benefits of moving to the cloud.

“The way to look at it is that prices won’t go down. We already pay more from an international perspective,” Oostveen told The Australian Financial Review.

“So rather than driving the cost down by allowing Australian end users to participate in the global ­marketplace of services. . . it keeps pricing at a status quo by not opening up competition.”

Oostveen said Australia had a large and mature market, which meant overseas players would be forced to establish local data centres or work with partners like NextDC.

He also said small and innovative start-ups from overseas would probably avoid Australia because of the increased cost of doing business here.

“One of the biggest threats to the amount of investment we saw in local data centres was global cloud and data centre services.”

“If this legislation does indeed pass, it will alleviate the pressure. This gives local providers an incredible shot in the arm.”

According to a report by workplace provider Regus, which surveyed more than 400 business leaders across Australia, the use of IT cloud applications is seen as a key cost-saving measure.

The survey reveals 43% of Australian firms identify the use of IT cloud applications as the best way to cut costs while still enabling growth.

Forty-three percent also identify pay-as-you-go business services as a measure to cost-effective growth, followed by a shorter supply chain (39%), and reducing fixed workspace (37%).

William Willems, Regus regional vice president for Australia, New Zealand and South East Asia, says companies are investigating smarter ways to build agility into their operations.

“Pay-as-you-go is top of mind in these circumstances, be it through using more cloud applications or moving to a flexible workplace model,” Willems says.

According to a survey conducted by Telsyte, more than half of Australian enterprises already use server virtualisation technology, and 35% are considering a private cloud.

The Regus research also reveals a geographic split in opinion, with companies in Sydney and Brisbane more interested in utilising the cloud than their counterparts in Melbourne and Perth.

As expected, ICT firms will lead the way, with 62% indicating the cloud is the best way to save on costs while growing, followed by those involved in the healthcare and finance industries.